Yes, DSD behaves differently than PCM when amplitude exceeds full scale. But the noise increases exponentially, together with a corresponding loss of detail. And you end up with a bitstream that is illegal to master onto an SA-CD, so you need to reduce levels, which means processing the signal.

I seem to recall he said it was better to record under -3 to -6dB below full scale, otherwise DSD loses definition at the top end.

whether or not DSD behaves better at higher than 0dB FS is kind of a moot point, because the signal is illegal by Scarlett Book standards, and if you try to play it back on a DAC, the signal may clip anyway (because the Vref+ and Vref- is still set at fullscale, so the DAC is physically incapable of generating higher than fullscale voltages).

0dBfs = -6dB 'SACD' or another way; The nominal maximum level for an SACD is 6dB below PCM's absolute maximum of 0dBfs.

The maximum legal limit of an SACD's amplitude is +3.1 dB SACD or -2.9dBfs PCM. The mentioned 'Scarlet Book' also sets limits for ultra-sonic noise and DC offset.

What I actually said is that I hear problems with pushing levels up to the +3.1 maximum level and prefer to keep my maximum to 0dB SACD, with occasional peaks going up to about +1.5 dB SACD.

Really fast transients (essentially inaudible) are not really the problem; it's when the peak duration is around 200 samples or longer that it starts to become noticeable.

There is nothing gentle or soft about signals that exceed the +3.1 level; it's illegal because it is gross over-modulation of a system that behaves best with 50% modulation (-6dB), but will tolerate 76% modulation (-3.1dB) - just don't spend any 'musically significant time' at that latter level...

Now, if you'll excuse me, I have to go and finish making someone's CD really $%&$%ing loud.